Ways to Protect your Business Accounts

By Patrick Fisher | Published: March 2023

Recent events have brought new attention to the financial services industry and have business leaders wondering if they are taking the right steps to ensure their money is safe. There are several ways to safeguard against threats like fraud or market volatility but ensuring your business’ money is protected in Federal Deposit Insurance Corporation (FDIC) eligible accounts is a great start.

Most individuals are familiar with the FDIC because of its protection of consumer bank deposits but business accounts are also eligible for FDIC coverage. While these accounts are technically insured up to $250,000 (per depositor, per insured bank), there are many strategies you can discuss with your relationship manager to maximize your coverage.

The Basics
FDIC insurance is designed to enable bank customers to place their money at FDIC-insured banks across the United States, with the backing of the Federal government. Customers do not need to apply for FDIC insurance coverage, as it is automatic if the account is opened at an FDIC-insured financial institution.

All accounts owned by a corporation, partnership or unincorporated entity at the same bank are added together and insured up to $250,000, which does not include any personal accounts of the business owner(s).

Business accounts that are FDIC-insured include:

• Checking accounts.
• Savings accounts.
• Money market deposit accounts.
• Certificates of Deposit (CDs).
• Cashier's checks.
• Money orders.
• Official items issued by a bank.

Qualities to Look for in a Banking Partner
Having the right banking partner can make all the difference in safeguarding your money and giving you peace of mind. When considering your current or future banking relationship, below are key considerations:

• Well diversified and capitalized: Your banking partner should have a diversified business model with a strong deposit base and limited exposure to any one industry. They should also have a proven track record of exceptional credit and solid asset quality.
• Know your banker not just your bank: You should be able to reach out to your banker for advice to help your business grow. Your relationship manager should know your industry and your region. It is important to have a close relationship with a person as well as the institution as this will help for a faster response when needs arise.
• Liquidity: A strong liquidity position will ensure that your business has access to cash you could need at a moment’s notice to cover necessary expenses like payroll or rent. You could consider a money market account or even a short-term CD to have access to cash.Your relationship manager should be able to provide you with sound counsel including cash management tips to improve liquidity. You may also want to work with a financial advisor on investing your cash.

Fighting Fraud
As with any major shift in the banking industry, fraud looms as a threat for all account holders. Remain vigilant of activity that could impact your funds by keeping the following in mind:

• Remain diligent related to all forms of fraud: professionally and personally.
• Be extra cautious for suspicious emails containing links and attachments.
• Be aware of unsolicited wire transfers and DocuSign requests.
• Be leery of robocalls, calls from the IRS, unexplained debit and credit card transactions, and even personal tragedy story scams related to Silicon Valley and Signature Bank failures.

How to Calculate Your Coverage
You should always talk to your relationship manager about your limits, how much of your money is protected, and what is excess, and other products and services to protect your accounts. The FDIC also provides a great tool for determining your coverage called the Electronic Deposit Insurance Estimator (EDIE) calculator. Using this calculator, you can enter your deposit account information at any insured bank and generate a report showing what funds are insured and what funds (if any) are uninsured.

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About the Author – Patrick Fisher
Patrick Fisher is Senior Vice President, Philadelphia Team Lead, Commercial Banking at WSFS Bank. For more than 20 years, Patrick has been recognized as a highly qualified commercial banking manager, including more than a decade building, coaching and leading successful client portfolio teams and generating annual loan growth and revenue increases. He is a veteran of the United States Marine Corps, where he served as an intelligence analyst, and received his B.S. from the Rutgers University School of Business.